Good morning Dinks. Actually, my favourite time of the year is my birthday but I do love tax time, especially when I am getting a tax refund. Tax time is spring time that means the weather is getting warmer and summer is on its way.
Last week I took our personal income tax file to my accountant’s office and yesterday Nick and I found out that we are getting an income tax refund. Admittedly our tax refund is not as much as I hoped it would be, but I guess that is just human nature right? We always want more. I am definitely thankful that we are getting an income tax refund (regardless of the amount) because receiving money is always better than owing money to the government.
The importance of a good accountant
There are several ways that people can get a tax refund, including paying a little extra income tax during the year with each paycheck and getting a lump sum refund when you file your annual income taxes. I personally don’t believe in prepaying for anything therefore this is not my personal income tax strategy.
My boyfriend and I file joint taxes because it is more financially advantageous than filing separately. The key to getting a tax refund is know what deductions you can claim, make sure you are having a reasonable amount of income taxes deducted at source on each pay check and always ask your accountant for some tips.
I absolutely love my accountant. Every year he gives us advice on what to do over the next year to ensure that we continue to receive a tax refund. Of course having expenses to deduct against my freelance income helps, but if my expenses always exceed my income I will never save any money. This is where the expertise of a creative account comes in.
Spend or save: What are you going to do with your tax refund?
In the past my income tax refund has always gone towards repaying my debt. This year I don’t have that obligation so now I have to decide what to do with my half of our income tax refund.
There are two options: I can save my income tax refund or I can spend it. Of course spending it on one or two awesome vacations is the more fun option and saving my income tax refund is the more boring option. I would much rather enjoy my money and spend it but I am going to be responsible and save it.
I am not saving for anything in particular but at least the money will be in my account if I need it. Trust me I would much rather save my income tax refund because I have three trips planned this year and the first one is quickly approaching in May, but instead for the first time in many years (actually the first time in my entire life) I am going to put the entire amount of my personal income tax refund into my savings account.
Photo by taxcredits